Comment by uyzstvqs
21 days ago
Prediction markets are not considered gambling for the same reason that stock markets aren't. There's no fixed odds or random chance. A skilled analyst can make consistent returns.
Unlike stock markets, prediction markets also provide valuable data on important world events, such as elections. It's wisdom of the crowd with financial incentive.
> A skilled analyst can make consistent returns.
So can a skilled coach make consistent returns in his sport. But sportsbetting is considered gambling.
Depends on the scope. If you take stock movement, and zoom in close enough, the fluctuations can be considered random. And suddenly you have people putting their money on things like binary options.
Surely, in the prediction market, it is possible to set up prediction bets which are practically impossible to predict. And with binary outcome, your odds will be 50/50.
Equities markets allow society to collective allocate labor resources and they incentivize the public discovery of business intelligence. Prediction markets reward the public discovery of gossip. Any kind of trading can be gambling depending on how you do it. But with equities the odds are usually almost guaranteed to be in your favor if you long them and wait. I can't remember ever seeing a prediction market where I felt I could have a thesis on its outcome, unless I was spying on people. So I really don't see how they could be anything but gambling for most people.
There is zero practical difference between going to a bookie and betting on X team to win a game and going to a broker and buying an equivalent amount of predictive futures contracts for X team to win the game. Some people can also consistently make money on sports betting apps until their accounts get banned for winning. The difference is purely the legal language used (and the elimination of any risk for the bookies).
With stock markets, at least in theory that money can be used to make a product to sell. They're not sum-zero games. Even if the company were to liquidate, you would be entitled to a share of actual assets after creditors were paid. This might seem foreign to some modern social media investors who YOLO with leverage all their money on meme stocks, but I would not be against that being reined in too.
Also, I really struggle to see anything coming out of prediction markets as valuable, especially not on a scale that would counteract their destructiveness. Like, polls are basically equally accurate, and there is zero benefit to anyone to know that there's a 76% chance that Trump will say the word "historic" during his speech Thursday.